Vietlaw Weekly Newsletter No. 351
Certificate of Origin (C/O)
New regulations on certification of origin of goods
Decree No. 31/2018/ND-CP dated March 8th, 2018 of the Government on guidelines for the Law on foreign trade management in terms of origin of goods
In comparison with the earlier regulations at Decree No. 19/2006/ND-CP , this Decree supplements new regulations pertaining to criteria for certification and issuance of certificate of origin (C/O). In particular:
- It is compulsory to register the trader profile upon applying for the first C/O (Article 13).
- It is allowable to change in issuing authority other than the authority with which the trader profile has been registered (Article 14).
- To specify applications for issuance of C/O in specific cases (Article 15).
- It is allowable to declare online procedures for C/O issuance (Article 16).
- If a C/O is not issued at the time of export, it may be issued on a later date within 1 year from the date of shipment (Article 17).
- It is allowable to re-issue C/O in case of unintended mistakes or the C/O is lost or damaged and it is allowable to separate the C/O into at least 2 sets (Article 18).
- To supplement the regulations on issuance of C/O remaining origin, applicable to cases in which goods are sent from abroad to bonded warehouses of Vietnam and then they are exported to another country or sent to inland areas (Article 19).
- To specify cases of refusal of application for C/O or revocation of issued C/O (Articles 21, 22).
- To allow trader to self-certify origin of exported goods (Article 25).
This Decree comes into force from March 8th, 2018 and replaces Decree No. 19/2006/ND-CP dated February 20th, 2006.
From March 8th, 2018 to June 30th, 2018 inclusive, regulations on application for issuance of C/O, procedures for declaration and issuance of C/O at Decree No. 19/2006/ND-CP remain effective.
ND31_08032018CP[ENGLISH].pdf (English translation)
Regarding the right to export on the spot of FDI enterprises
Official letter No. 130/XNK-CN dated January 31st, 2018 of the Ministry of Industry and Trade regarding FDI enterprises' export on the spot
Relating to the export right of FDI enterprises, the Ministry of Trade assumes that there are not legal normative documents regulating the case in which FDI enterprises excising the right to export goods (including goods imported or produced by other enterprises in Vietnam) to foreign traders with the term of delivery of goods in Vietnam – in other words, FDI enterprises have not yet allowed to export goods on the spot.
The newest regulations on the export right of FDI enterprises prescribed in Decree No. 09/2018/ND-CP only allow FDI enterprises to buy goods in Vietnam to export abroad, excluding the right to buy goods to export on the spot.
With regard to the activity of export on the spot, FDI enterprises are only allowed to export on the spot products, machinery serving processing or products produced themselves (Article 32 of Decree No. 187/2013/ND-CP , point c Clause 3 Section II of Circular No. 04/2007/TT-BTM).
CV130_31012018BCT[VLO].pdf (English translation)
Cars - Motorcycles
Guidelines on classification of pickup vehicles
Official letter No. 7908/DKVN-VAQ dated December 14th, 2017 of the Ministry of Transport on classification of pickup vehicles
According to this Official letter, pickup vehicles are classified into 2 types: Pickup with single cab and Pickup with double cab.
Cargo pickup with single cab has these characteristics:
- Open-cargo container (which may have plate) or closed - cargo container, which may or may not be attached to the cabin, is arranged for loading and unloading;
- There is a line of seats in cabin;
- Container is not equipped with internal facilities serving passenger transport;
- The useful area of the container (Fh) is not less than 1 m2 (determined as Appendix A of TCVN 7271: 2003);
- Total permissible volume of cargo (mh) must be larger than total permissible volume of passenger (mng), calculated according to the following ratio: mng/mh x 100% ≤ 80%.
Cargo pickup with double cab also has characteristics similar to those of cargo pickup with single cab. The only difference is that cargo pickup with double cab has 2 lines of seats in cabin with the number of seats (including driver) not exceeding 5
CV7908_14122017BGTVT[VLO].pdf (English translation)
Regarding import of plant protection drugs from March 28th, 2018
Official letter No. 897/GSQL-GQ1 dated March 28th, 2018 of the General Department of Vietnam Customs regarding import of plant protection drugs
Relating to the List of plant protection drugs permissible/impermissible to use in Vietnam, the General Department of Vietnam Customs requests to base on the new List promulgated at Circular No. 03/2018/TT-BNNPTNT to carry out from March 28th, 2018.
With regard to plant protection drugs with categories I, II cutely toxic active ingredients under Globally Harmonized System of Classification and Labeling of Chemicals (GHS), it is required to apply for license to import. The Ministry of Agriculture and Rural Development has proclaimed at Official letter No. 589/BVTV-QLT dated March 9th, 2018.
CV897_28032018TCHQ[VLO].pdf (English translation)
Regarding transportation costs of imported goods
Official letter No. 2001/TCHQ-TXNK dated April 13th, 2018 of the General Department of Vietnam Customs regarding transportation costs
According to the General Department of Vietnam Customs’ opinions, Container Imbalance Charge (CIC), delivery order (DO) fee, and container cleaning charges shall be added to taxable value only when they belong to the additions specified at point g Clause 2 and fully meet the conditions regulated at Clause 1 Article 13 of Circular No. 39/2015/TT-BTC .
Regarding guidelines on declaration and payment of value added tax on costs which have been declared the additions to value of imported goods, the General Department of Vietnam Customs is consulting opinions of related agencies and it will provide written guidelines soon.
CV2001_13042018TCHQ[VLO].pdf (English translation)
Regarding import duty on transportation costs
Official letter No. 1532/TXNK-TGHQ dated March 30th, 2018 of the General Department of Vietnam Customs regarding issues relating to customs value
According to the guidelines provided in Official letter No. 1395/TCHQ-TXNK dated March 16th, 2018, transportation costs and any costs relating to the transportation of goods to the first importing checkpoint shall be added to customs value only when they belong to the additions specified in point g Clause 2 Article 13 and meet all 3 conditions specified in Clause 1 Article 13 of Circular No. 39/2015/TT-BTC .
In contrast, if they fail to meet one of the 3 conditions specified in Clause 1 Article 13 of Circular No. 39/2015/TT-BTC , they shall not be added to customs value.
“The first importing checkpoint” means the discharge port written in the bill of lading as prescribed in Clause 2 Article 20 of Decree No. 08/2015/ND-CP .
CV1532_30032018TCHQ[VLO].pdf (English translation)
Regarding EIT incentives for investment projects in industrial complexes
Official letter No. 2735/CT-TTHT dated January 18th, 2018 of the Department of Taxation of Ha Noi city regarding enterprise income tax (EIT) incentives
Relating to areas entitled to tax incentives, according to this Official letter, the EIT incentive polices for investment projects in INDUSTRIAL ZONES regulated in Article 16 of Decree No. 218/2013/ND-CP are not applicable INDUSTRIAL COMPLEXES.
As the result, projects of new investment in industrial complexes shall not be entitled to tax incentives as those given to projects in industrial zones.
CV2735_18012018CTHN[VLO].pdf (English translation)
Import/export business is not entitled to tax incentives
Official letter No. 2870/CT-TTHT dated January 18th, 2018 of the Department of Taxation of Ha Noi city regarding enterprise income tax incentives
According to this Official letter, business sectors such as construction and technology counseling; import, export and distribution of goods are all not entitled to tax incentives.
Accordingly, in case an enterprise executes a project invested in such sectors, it shall not be entitled to enjoy tax incentives.
CV2870_18012018CTHN[VLO].pdf (English translation)
Regarding VAT deduction and depreciation of fixed assets upon buying an apartment
Official letter No. 2736/CT-TTHT dated January 18th, 2018 of the Department of Taxation of Ha Noi city regarding deduction of input VAT and depreciated cost of fixed assets upon buying an apartment
In case an enterprise buys an apartment which is used as a place for foreign experts to stay and for employees of its branches to rest when they come to the enterprise to take meetings , whether or not expenses are accounted and VAT are deducted in case.
According to Clause 1 Article 14 of Circular No. 219/2013/TT-BTC , point a Clause 2.2 Article 4 of Circular No. 96/2015/TT-BTC , for fixed assets being housing, enterprises are only allowed to make cost accounting, deduct tax with regard to “recreation rooms” and “houses for workers”.
Accordingly, if the enterprise buys the apartment for foreign experts who do not sign labor contract to stay or for its branches’ employees to rest during meetings, expenses of buying such apartment shall not be included in deductible expenses and input VAT shall not be deducted.
CV2736_18012018CTHN[VLO].pdf (English translation)
Regarding determination of residence status when a foreigner comes back to work in Vietnam
Official letter No. 970/TCT-TNCN dated March 23rd, 2018 of the General Department of Taxation regarding guidelines on personal income tax (PIT) policy
According to this Official letter, in case a foreigner comes back to work in Vietnam after he returns his home country and the tax withholding, tax accounting have been made according to regulations for the previous working period, it is required to re-determine residence status and tax year when the foreigner comes back to work in Vietnam.
Base used for determination of residence status and tax year is the first date of presence in Vietnam.
CV970_23032018TCT[VLO].pdf (English translation)
Regarding tax policies applicable to training, consultation activities
Official letter No. 4884/CT-TTHT dated January 30th, 2018 of the Department of Taxation of Ha Noi city regarding tax policies applicable to activities of training, consultation
In case a company in Vietnam signs a contract to hire a parent company outside Vietnam to provide training for its experts and provide consultation for preparation of bidding dossiers, if the conditions in Clause 1 Article 4 of Circular No. 96/2015/TT-BTC are met, the company is allowed to include costs of training and consultation into deductible expenses.
With regard to the service of expert training, if it is performed outside Vietnam (except for online training), it shall not be subject to withholding tax (Clause 4 Article 2 of Circular No. 103/2014/TT-BTC).
In addition, if the training course is suitable to specializes jobs, profession of the company’s laborers or it is taken place under the company’s plan, PIT shall be also exempt in this case (point dd.6 Clause 2 Article 2 of Circular No. 111/2013/TT-BTC).
However, with regard to the service of consultation for preparation of bidding dossiers, the company shall withhold and pay withholding tax on behalf of the parent company at the rate of 5% value added tax and 5% enterprise income tax (Articles 12, 13 of Circular No. 103/2014/TT-BTC).
CV4884_30012018CTHN[VLO].pdf (English translation)
Import and export duties
Regarding application of FTA tax rate to goods imported/exported on the spot
Official letter No. 3263/VPCP-KTTH dated April 10th, 2018 of the Government Office regarding the application of special preferential tax rate to goods imported/exported on the spot
Relating to the application of special preferential tax rate (FTA) to goods imported/exported on the spot, the Government provides guidelines as follows:
- Between January 1st, 2012 and before September 1st, 2016, the Ministry of Finance settles according to its competence and regulations of laws on import duty and export duty applicable within such period.
- From September 1st, 2016 onwards, to carry out according to the regulations of the Law on import and export duties No. 107/2016/QH13. If there are problems arisen, the Ministry of Finance shall assume the prime responsibility for, and coordinate with, related agencies to study and propose amendment, supplements to be appropriate.
CV3263_10042018VPCP[VLO].pdf (English translation)
New regulations on maintenance of maritime works
Circular No. 52/2017/TT-BGTVT dated December 29th, 2017 of Ministry of Transport on maintenance of maritime works
According to Article 5 of this Circular, except for temporary maritime works, other maritime works are required to establish a maritime works maintenance process.
With regard to the maritime works that are put into operation without the approved maintenance process, the owner or the manager/operator/user of the works shall establish, approve, complete the construction maintenance process before December 31st, 2018.
The establishment, assessment, approval and adjustment of maritime works maintenance process shall be carried out according to Article 38 of the Decree No. 46/2015/ND-CP instead of Decree No. 114/2010/ND-CP under earlier regulations.
TT52_29122017BGTVT[ENGLISH].pdf (English translation)
Regarding duty exemption for components imported for manufacture of inhalation machines
Official letter No. 1383/TXNK-CST dated March 21st, 2018 of the General Department of Vietnam Customs regarding tax policies applicable to goods imported serving projects on manufacture, assembly of medical equipment
According to Clause 14 Article 16 of the Law on import and export duty No. 107/2016/QH13 and Article 23 of Decree No. 134/2016/ND-CP, raw materials, supplies and components that cannot be domestically manufactured and are imported for manufacture or assembly of medical equipment of an investment project given priority are exempt from import duties for 05 years.
In addition, according to Clause 2 Section VII Annex VI issued together with Decree No. 134/2016/ND-CP “inhalation machines” belong to the List of prioritized medical equipment.
Accordingly, when enterprises import raw materials, supplies and components that cannot be domestically manufactured for manufacture, assembly of inhalation machines of their investment projects, they shall be exempt from import duties for 05 years. Duration of duty exemption is counted from the manufacture commencement date.
Dossier of, procedures for duty exemption shall be carried out according to Article 30, Article 31 o Decree No. 134/2016/ND-CP.
CV1383_21032018TCHQ[VLO].pdf (English translation)
Regarding environment protection tax on white oil imported for export production
Official letter No. 1597/TXNK-CST dated April 5th, 2018 of the General Department of Vietnam Customs regarding environment protection tax policy applicable to white oil
According to Article 2 of Circular No. 159/2012/TT-BTC, goods imported for processing products for export shall be exempt from environment protection tax. However, goods imported for export production shall not be exempt from environment protection tax.
Accordingly, when an enterprise imports white oil under E31 mode (production for export), it has to pay environment protection tax and shall not be entitled to receive a refund of the already – paid environment protection tax upon the export.
CV1597_05042018TCHQ[VLO].pdf (English translation)
New guidelines on diseases and papers for enjoyment of social insurance benefits
Circular No. 56/2017/TT-BYT dated December 29th, 2017 of Ministry of Health guidelines for some articles on health of the Law on social insurance and the Law on occupational safety and hygiene
This Circular provides for diseases, the authority to determine diseases eligible for lump-sum social insurance payout; Medical assessment of work capacity reduction (whole person impairment) as the basis for workers and their relatives to receive social insurance payout; and issuance of discharge notes, birth certificate, copies of medical records, confirmation of maternity leave, confirmation of poor postpartum health and confirmation of eligibility to receive social insurance benefits.
Accordingly, one of the noticeable points of this Circular is the supplement of entities eligible for lump-sum social insurance payout. In particular, apart from persons who suffer from diseases causing danger to their lives such as cancer, paralysis, cirrhosis, severe tuberculosis, etc. or suffer from diseases resulting in at least 81% of work capacity reduction, persons who suffer from at least 81% impairment level shall be also eligible for lump-sum social insurance payout
In addition, this Circular also supplements some principles in issuance of confirmation of eligibility to receive social insurance benefits such as: only one confirmation of eligibility to receive social insurance benefits shall be issued each doctor visit; If a worker is treated at various departments of a health facility in a day, only one confirmation of eligibility to receive social insurance benefits shall be issued.
This Circular takes effect from March 1st, 2018 and replaces Circular No. 14/2016/TT-BYT dated May 12th, 2016.
TT56_29122017BYT[ENGLISH].pdf (English translation)
State Capital Investment
Criteria for evaluation and rating of banks with state capital
Circular No. 12/2018/TT-BTC dated January 31st, 2018 of Ministry of Finance on guidance on financial supervision, evaluation of the efficiency of state capital investment in wholly state-owned credit institutions and credit institutions of which more than 50% charter capital is held by the state
This Circular provides guidelines on preparation of financial plans and criteria, method for evaluation, rating of banks with state capital therein.
Accordingly, banks with state capital (at least 50% charter capital is held by the state) shall be evaluated and rated (A, B, C) based on these criteria: gross revenue; net income; bad debt ratio; compliance with laws and provision of public products and services (if any).
A bank is given “A” rating if it has actual bad debt ratio lower than 3%; it shall be given “C” rating if its debt ratio is higher than 3.5%; if the debt ratio is between 3% and 3.5%, the bank shall be given “B” rating.
In case of basing on return on equity (ROE), a bank shall be given “A” rating if it has attained a ROE equal to or higher than the planned one. It shall be is given “B” rating if it has attained a ROE lower than but equal to at least 90% of the planned one and it shall be given “C” rating if it has attained a ROE lower than 90% of the planned one.
This Circular takes effect from March 19th, 2018 and applies from the fiscal year 2018.
TT12_31012018BTC[ENGLISH].pdf (English translation)
Tax of Contractor
Regarding withholding tax upon import/export on the spot
Official letter No. 4876/CT-TTHT dated January 30th, 2018 of the Department of Taxation of Ha Noi city regarding withholding tax policy
According to Clause 2 Article 13 of Circular No. 103/2014/TT-BTC, if a foreign organization sells goods to a Vietnamese enterprise in the form of import/export on the spot, it shall be subject to withholding tax in term of enterprise income tax at the rate of 1% upon revenue. With regard to value added tax (VAT), the foreign contractor is exempt from VAT.
However, the buyer has to declare and pay VAT when it carries out procedures for import on the spot.
CV4876_30012018CTHN[VLO].pdf (English translation)
Agriculture restructuring plan during 2017 - 2020 period
Decision No. 1819/QĐ-TTg dated November 16th, 2017 of the Prime Minister on approval for the agriculture restructuring plan 2017 - 2020
This Decision takes effect from the date of its signing.
QD1819_16112017TTg[ENGLISH].pdf (English translation)
Regulations on financial management of lottery enterprises applicable from 2018
Circular No. 138/2017/TT-BTC dated December 25th, 2017 of Ministry of Finance on guidelines for expenses of lottery enterprises as prescribed in the Government’s Decree No. 122/2017/ND-CP dated November 13th, 2017 on financial management and performance assessment of lottery enterprises, stock exchanges and Vietnam securities depository
This Circular comes into force from February 10th, 2018 and applies from the fiscal year 2018.
To abolish Circular No. 01/2014/TT-BTC dated January 2nd, 2014.
TT138_25122017BTC[ENGLISH].pdf (English translation)
Import and export policies
Rice export market development strategy of Vietnam for 2017-2020 period
Decision No. 942/QD-TTg dated July 3rd, 2017 of Prime Minister on approval for rice export market development strategy of Vietnam for the period of 2017-2020 with vision towards 2030
This Decision takes effect from the date of its signing.